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  • New rules on overdraft protection

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    10 posts, 7 voices, 2141 views, started Aug 13, 2010

    Posted on Friday, August 13, 2010 by Cynthia Schmidt

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      When I opened an account recently I was asked if I wanted to be enrolled in an overdraft protection program. She explained that if I spend more than is in my account the bank will honor it and I won’t be charged a fee. Huh?

      I asked what would happen if I said no, I don’t want to be in the program and I spend more than I have.

      She told me that my card would be denied at the merchant and I would still not be charged a fee.

      I looked at her dumbfounded and asked, “If I don’t have enough money in my account to pay for something, shouldn’t I be denied?”

      She didn’t look very happy about me asking so many questions but, really, it makes sense to not spend more than I have on a check card......, right?

      So what are these new rules going to do? Are people going to go on a spending spree knowing they don’t have the money to cover their purchases? And if the banks can’t charge them a fee for this, who pays for all that bad debt?

      Annie?? I know you know this one. What do you think of this?

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        • 0 votes vote up vote up

          Vikki Hall wrote Aug 13, 2010
        • Lol! Really where is Annie on this?????

          Here is my understanding.....

          My bank has always had overdraft protection and there was always a charge for it. That hasn’t changed! But what has changed is how much they can charge me if I overdraft. Something to do with how the credit card companies and the banks were charging people were sky high and Prez O put into place laws on raping those who overdraft. (I’m sure Annie will word it better) But now because there is a limit on how much the bankc and CC companies can charge they may start charging an annual fee.

          I don’t think it is unlimited on overdraft. I know one of my banks will cover up to $500 and the other bank will up to $300 (this I found out when they sent me the notice).

          I do agree that it is crazy that you don’t get denied if you overdraft.



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        • 0 votes vote up vote up

          Cheekymonkey wrote Aug 13, 2010
        • worried I thought it was you could say no and your card would be denied and not pay for a fee or you choose yes and the bank would pay it if you went over but charge you the fee. And we have to choose by the 15th of this month.



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        • 0 votes vote up vote up

          Cynthia Schmidt wrote Aug 14, 2010
        • I asked the woman at the bank, “what happens if someone gets my debit card and has a hayday before I discover it’s missing? Won’t that drain my account AND accumulate fees?”

          She had no answer for me.

          I chose not to opt in. If I’m spending more than I have I want to be denied.



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        • 0 votes vote up vote up

          Kyah wrote Aug 14, 2010
        • I’m not opting for overdraft protection, I stick to my budget, no matter what.

          Cynthia that’s a good question, because here in NY I don’t use anything but bank ATMs because there have been some machines that crooks have altered so that they can pick up your PIN as well as your account number. At least the bank ATMs are inspected often, the ones on the street and gas stations not so often. When I need to make a large withdrawal, I go to the bank with paper checks, and they have my photo on file so they know it’s me. I also check my balance at least 3 times a week online, so if anything fishy jumps off, I can tell when and where. I stopped using my debit for restaurants and major purchases, just groceries and drug store purchases. I use the credit cards for those major purchases, because if I have a dispute I am able to contest it before paying for it. Using the debit, the money’s already gone.



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        • 0 votes vote up vote up

          Mary Clark wrote Aug 14, 2010
        • Starting in about an hour eastern time...on August 15th...the part of the Card Act you all have been discussing will come into play.  What this means is...with a debit card you cannot be charged by your financial institution an insufficient fund fee due to transactions that do not have $$ amount for clearing...example:  when you currently use your debit card at the pump and you swipe the card...it authorizes a $1 for that transaction no matter how much gas you pump.  If you pump $25 worth of gasoline...your card only pre-authorizes $1 until that merchant post it.  Then the amount you actually spendt will clear the account.  Reason being...the gas industry wants you to be able to pump as much gasoline as your tank holds.  If your card didn’t work this way you would be pre-paying a certain amount of gasoline...thus...the gas industry will definitely start losing money because people will be more inclined to pump a lesser amount.  With the $1 pre-authorization, people are able to pump to their tanks will not hold anymore.  Therefore...you spend more.  

          Okay..so what does all this mean....it means...if you have a transaction that does not have pre-authorized $$ amount other than the $1...if that transaction tries to clear and causes you to go into the negative the financial institution cannot charge you a NSF fee. Other transactions that have a set amount...if you don’t have the money in your acct is it not going to work unless you are set up with overdraft.  

          Because of this new card act...financial institutions are going to lose a lot of money.  In the past they made a lot of money off of NSF fees.  So...with that said....don’t be surprised if your financial institution doesn’t start charging for services and things that they did not charge for in the past.  Believe me they are going to make up the money somewhere!

          FYI:  Do not use your debit card for hotel reservations, car rentals, or airline reservations!  Those three can hold up to the (3) times the amount you spend.



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        • 0 votes vote up vote up

          Cheekymonkey wrote Aug 14, 2010
        • estatic I’m not opting for it either. If you don’t have it don’t spend it. Or for life’s little mistake have your savings be your overdraft protection just put a limit on it.
          I even set up an account just for online purchases if money not there can’t buy,plus if someone gets info they won’t get that much.



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        • 0 votes vote up vote up

          Mary Clark wrote Aug 15, 2010
        • The best line of defense is to not spend more money than you have, keep a register of your transactions. Systems can go down, computers break, so know what you have in your bank acct.  So many people these days do not keep a register and just wing it on their balance.  Eventually this will come back and bite ya in the butt.  Online banking is a tool to make sure what you have in your register is correct.  

          At our financial institution, your primary savings or secondary savings IS your overdraft acct.  If it kicks in or has to be used there is only a $2 fee to transfer those funds...which is better than having a $32 nsf fee for a check that does not clear.  

          Just remember this policy that starts today does not apply to checks.  If a check tries to clear and the funds are not there it will be returned and your bank/CU will charge you a nsf fee.  

          My suggestion is to have an acct. that your debit card is only linked to..and another acct. that you pay bills and/or write checks out of..that way...when you pay your bills whether it’s using a bill pay service or with checks, and you transfer funds to cover those transactions, you will know that your bills are paid and you don’t accidentally spend money already allotted for those bills using your debit card.

          If your financial institution has online banking and you‘re not currently enrolled, my suggestion would be to do it.  It’s a great way for you to monitor your own accounts and for you to balance daily instead of once a month. Balancing day allows you to know where you stand every single day.



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        • 0 votes vote up vote up

          Vikki Hall wrote Aug 15, 2010
        • MC those are great suggestions! I use web bill pay for everything and I print out a statement every 2 weeks. I opted out of the overdraft too since my bank will move money from my savings. I think it is $1 when they do that. I got in the habit of moving all left over money into my savings acct which is not linked to my ATM or debit card. This has been a great way to save money.



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